A SPATE of geotechnical mergers and acquisitions is being driven by the UK's buoyant construction industry and big opportunities in brown field remediation, an analyst told GE this month.
April and May will have been busy months for the sector after Keller Group bought drilling and grouting specialist Systems Geotechnique, and environmental consultant RSK merged with both SI contractor Structural Soils and remediation specialist ESA.
Lankelma Andrews and Gardline Geosciences also merged.
The deals add to industry consolidation last year that saw Fugro buy Seacore.
Panmure Gordon analyst Andy Brown told GE: 'There is a fair bit of cash around and lots of work in the geotechnical and brown field remediation sectors, so big firms want more clout in the market.'
'A lot of big contractors have small divisions that do this, but there isn't one major leader out there.
These types of deals are likely to carry on.'
RSK director Neil Broad said competition among major consultants and contractors to offer more specialist geotechnical services was driving the spate of deals. 'Most services will be in-house in the future and there will be fewer subcontractors, ' he said.
'We are increasingly being used to provide detailed risk assessment and remediation advice on brownfield land.
With business opportunities emerging in the brown field sector to the extent they are, the merger puts RSK in a good position.
'There is a huge amount of investment interest in the environmental services industry and a lot of consultants are bringing more services in-house, ' Brown said.
'It makes huge nancial sense for us to consolidate Structural Soils into our group and develop relationships with clients in these areas.
There's no doubt that growth in the brown field and environmental sector is going to be huge in the next 10 to 15 years.'
The state of the market had also driven Keller to make its first acquisition in the UK for many years with its takeover of Systems Geotechnique, Keller chief executive Justin Atkinson told GE.
He added that the firm had been looking for some time for a geotechnical specialist with a turnover of more than £10M.
'[Systems Geotechnique] has been growing and has got a good management team - clearly it is ready to go for the next stage of growth. But it needs more investment and administrative support, which we can give, ' he said.
Why the deals were done
RSK/Structural Soils merger Geotechnical consultant RSK's merger with site investigation contractor Structural Soils creates a group with more than 700 staff.
As part of major growth plans, RSK had already bought the minority shareholding of consultant ENSR in December 2006. It now has a turnover of £40M and is aiming to achieve £110M by 2011.
The merger with the Bristol and Castleford-based firm gives RSK access to major UK clients such as Thames Water, the Highways Agency and Network Rail.
'Structural Soils was looking for somebody to sell to, ' RSK director Neil Broad told GE. 'It has an incredibly good name and reputation in the industry and some very good clients in Thames Water and Highways Agency.
'This is a major coup for us considering the amount of experience and expertise Structural Soils has.'
Structural Soils managing director Alec Handcock said: 'This is the right move for us and will help us evolve as a business. RSK's accreditations, in-house systems and vast range of environmental capabilities will be a tremendous addition to our own services.'
Keller buys Systems Geotechnique Keller Group has purchased Systems Geotechnique for £7M in cash, plus £1.5M in debt burden.
The purchase of the specialist restricted and minipiling firm,with sales of £17M a year, gives Keller a 'strong market lead' in drilling and grouting it claims.
'Systems Geotechnique brings considerable strength in terms of its people, equipment, design and construct know-how, and customer relations, ' said Keller chief executive Justin Atkinson.
'In return, the group offers strong nancing, systems and controls, which will enable this growing business to continue to develop.
Since news of the acquisition shares in Keller rose from 970.5p to 1008p.
Lankelma and Gardline Lankelma Andrews and Gardline Geosciences were due to merge on 1 May to create Gardline Lankelma. The newly created consultant will offer specialist near shore to deep water piling services. 'The merger will allow us to pool our resources and move forward into new and exciting areas, ' said managing director Eric Zon.